Editorial of the Day (15 Dec): Consultancy Firms

Context: The article discusses the increasing trend of governments, particularly in India, engaging consulting firms to assist in policy formulation and program implementation.

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Rise of Consultants in Government: Boon or Bane?

• Prevalence of Consultants in Government: In Union ministries and state secretariats, young consultants from global firms are a common sight, involved in crafting policies and implementing programs. They play a significant role in major government initiatives like cleaning the Ganga, Swachh Bharat and Jal Jeevan Missions, and economic development plans.
• Consulting Firms in India: The Indian government’s reliance on consulting firms has been significant, with reports indicating expenditures of around Rs 5,000 million over the last five years. The firms range from strategy consultants like McKinsey, BCG, and Bain to the Big 4 (EY, PwC, KPMG, Deloitte), offering a wide spectrum of services from policy advisory to program execution support.
• Concerns Over Consulting Usage: The article raises concerns about the over-reliance on consultants, potentially leading to a decrease in government capabilities. There’s a tendency to outsource routine tasks to consultants, leading to dependency and mission creep. This dependency could be exploited by firms for repeat business or influence policy formulation.
• Global Perspective: Internationally, the proliferation of consulting firms in government functions has raised alarms. Critics suggest that such practices could infantilize government, distort public policy objectives, and sometimes lead to unethical practices, as seen in some consultancy-related corruption scandals.
• The Term ‘Consultocracy’: The article introduces the term ‘consultocracy’ to describe the deep integration of consultants into government workings, potentially undermining the traditional role and capabilities of public servants.
• Benefits of Consulting Firms: Despite these concerns, the article acknowledges the advantages of engaging consultants, especially for specialised expertise in areas like agriculture, transport, energy, and digital initiatives like Direct Benefit Transfer programs.
• Need for a Regulatory Framework: It argues for a balanced approach to consulting engagement, highlighting the need for a comprehensive regulatory ecosystem. This system should ensure fairness, transparency, curbs on rent-seeking behaviours, and clear protocols for knowledge transfer and capacity building within the government.

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